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(Vol. 433 No. 9163) The Economist - The Economist (October 5th 2019 )-The Economist (2019 )

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OCTOBER 5TH–11TH 2019

China at 70—pomp and protests

Big Tech and the state gird for battle

Europe’s anti-populist backlash

What would Trump’s gators cost?

Masters

of the

universe

How machines are taking

over Wall Street

The EconomistOctober 5th 2019 5

1 Contents continues overleaf

####### Contents

The world this week 8 A summary of political and business news

Leaders 11 Robo-investing Masters of the universe 12 Greece’s debt odyssey End extend and pretend 12 Kashmir Vale of tears 13 Technology and politics Open season 14 Political rhetoric Down with the people

Letters 16 On Brexit, Afghanistan, popes, Einstein, Columbus, T. Boone Pickens

Briefing 18 Robo-investing March of the machines

United States 21 Texas won’t turn blue 22 On impeachment 23 A union retreat 24 Kennedy 4. 24 University admissions 25 Alligators in the desert 26 LexingtonDoug Jones

The Americas 27 Peru’s president v congress 28 Chile’s lithium-battery dream 28 Inuit orthography 30 BelloArgentina’s difficult road to redemption

Asia 31 India’s courts and Kashmir 32 Elections in Afghanistan 33 Bumpkins’ brides in Japan 33 Halal-crazy Indonesia 34 Making Indian computer chips 35 BanyanThe next phase in the South China Sea

China 37 Violence in Hong Kong 38 Cutting-edge weapons 40 ChaguanParading 70 years of Communism

Middle East & Africa 41 Crisis in Lebanon 42 Roads to ruin in Iraq 43 Netanyahu makes his case 43 Angola’s oil decline 44 Reform in Ethiopia

LexingtonDoug Jones, a prophet of Deep South moderation, illustrates liberalism’s present pains and future promise, page 26

On the cover

Forget Gordon Gekko. Computers increasingly call the shots on Wall Street: leader,page 11. How machines manage markets: briefing, page 18

China at 70—pomp and protests Official celebrations for National Day showed a worrying contempt for history: Chaguan,page 40. Weapons on parade, page 38. Hong Kong riots, page 37
Big Tech and the state gird for battleThe American government is lining up against the technology companies, page 55. Europe has so many complaints it hardly knows where to begin, page 56
Europe’s anti-populist backlashAfter a series of reverses, the populists are down but not out, page 45. Politicians who invoke “the people” are usually up to no good: leader, page 14
What would Trump’s gators cost? The president would like to reinforce his wall with a reptile-infested moat. We tot up the bill,page 25

8 The EconomistOctober 5th 2019

####### The world this week Politics

Chinastaged a huge parade to celebrate 70 years of Commu- nist rule. It involved more than 100,000 civilians, 15, troops and hundreds of weap- ons. Some of the equipment had not been shown in public before, including the df- intercontinental ballistic missile, which can hit any part of America. But a “white paper” issued by China said the country had “no intention” of challenging the United States, or supplanting it.

In Hong Kong, meanwhile, thousands of people marked the occasion as a “day of mourning” by staging an unau- thorised march. Some people later clashed with police in several locations. A policeman shot a teenage student in the chest—the first injury in- volving live ammunition since pro-democracy unrest broke out in the city four months ago.

Afghansvoted in a presi- dential election. The Taliban had vowed to disrupt the polling, which nonetheless was relatively peaceful. Turnout was extremely low. The results will not be announced until November.

North Koreaagreed to resume disarmament talks with Amer- ica after a hiatus of eight months. It later tested a mis- sile, which it said it launched from a submarine near its coast into Japanese waters.

A court in Pakistansentenced the brother of Qandeel Baloch, a social-media star, to life in prison for her murder. He said he had killed her to preserve the family’s honour, after she posted pictures of herself online. Activists for women’s rights had feared he would be

acquitted, since his parents had absolved him of blame, a factor Pakistani courts often take into account.

Vizcarra’s victory Peru’spresident, Martín Viz- carra, dissolved the country’s congress, which has obstruct- ed his legislative programme, and proposed to hold a con- gressional election in January. Congress refused to accept its dissolution and voted to sus- pend Mr Vizcarra as president. It installed the vice-president in his place, but she quit after just hours in the job.

Guyanais to hold elections on March 2nd. The government lost a vote of confidence last December. Next year Guyana is expected to begin receiving revenue from vast reserves of oil discoveredoff shore. The imfthinks that its economy may grow by 85%.

Prosecutors in New York alleged that the younger broth- er of theHonduranpresident, Juan Orlando Hernández, had accepted $1m from Joaquín Guzmán, a Mexican drug baron known as “El Chapo”, that was intended for the president. Mr Hernández said the claim was absurd, and noted that prose- cutors never alleged that he had received the money.

On a mission Democrats in the House of Representatives pushed ahead with an impeachment in- vestigationof Donald Trump’s request to the Ukrainian presi- dent to dig up dirt on the son of his rival, Joe Biden. Subpoenas were sent to Mike Pompeo, the secretary of state, and to Ru- dolph Giuliani, the president’s lawyer. In a Twitter meltdown, Mr Trump claimed the Demo- crats were staging a “coup”.

Bernie Sanderscancelled events in his campaign for the Democratic presidential nomi- nation until further notice, after he had heart stents insert- ed to relieve some chest pains. The 78-year-old has kept up a gruelling campaign schedule.

In a closely watched case, a judge ruled thatHarvarddoes not discriminate against Asian-Americans in its appli- cations process, finding that it passes “constitutional muster”. The plaintiffs argued that Harvard’s affirmative-action policy favours black and His- panic applicants. The matter will probably end up in the Supreme Court.

Two borders for four years Boris Johnson, Britain’sprime minister, made a new Brexit offer to the European Union. His proposal includes customs checks, but not at the border in Northern Ireland, plus a regu- latory border in the Irish Sea. Mr Johnson is determined to leave the euon October 31st, but is hampered by Parlia- ment’s legal stipulation that he must ask for an extension if there is no deal.

Brexit is not the only trouble for Mr Johnson. Hard on the heels of the controversy sur- rounding his relationship with an American businesswoman when he was mayor of London, a female journalist accused Mr Johnson of groping her thigh in 1999, when he was her boss. He denied it happened. Despite its leader’s problems theConser- vative Partyholds a resilient lead in the polls.

Sebastian Kurz and his People’s Party were the clear winners in Austria’ssnap election, caused after his government collapsed following a scandal connecting his coalition partners, the Freedom Party, and Russian money. However, he is still short of a majority, and is casting around for an alterna- tive to join a new government.

Some 20,000 people took to the streets in Moscowto demand the release of those arrested in earlier demonstra- tions over the exclusion of opposition figures from a city council election.

A tinderbox As many as 25 soldiers were killed and another 60 are missing after jihadists attacked two army bases in Mali. Sepa- rately al-Shabab, a jihadist group affiliated with al-Qaeda, attacked a convoy of Italian troops and an air base used by American forces in Somalia. The attacks highlight the deteriorating security across the Sahel and into the Horn of Africa.

At a pre-trial hearing lawyers for Binyamin Netanyahu, Israel’s prime minister, argued that he should not be charged with corruption. The attorney- general will decide whether to proceed with the indictments. Meanwhile, talks between Mr Netanyahu’s Likud party and Blue and White, a centrist party, over forming a govern- ment have stalled.

Hundreds of people protested in Lebanonas the government grappled with a worsening economic crisis. Enormous debt and shrinking foreign investment have led to fears that the Lebanese pound will be devalued and prices raised. Iraqisalso took to the streets to protest against unemployment and corruption. Security forces responded with live fire; at least 18 people were killed and hundreds wounded.

Software developers in Lagos, Nigeria’smain commercial city, started a campaign against harassment by the police, who single out people carrying laptops or smartphones for extortion. The arrests threaten a boom in startups.

Ugandabanned people from wearing red berets, which are associated with an opposition movement led by Bobi Wine. Mr Wine was recently charged with “annoying” the president.

Britain

Source: Politico *Poll of polls

Voting intention*, 2019, %

Jun Jul Aug Sep Oct

40 Boris Johnson elected leader

Conservative

Labour

Lib Dem Brexit Party Green SNP

10 The EconomistOctober 5th 2019

####### The world this week Business

A 15-year dispute oversub- sidies in the aerospace in- dustrycame to a partial climax when the World Trade Organi- sation ruled that America could levy $7-worth of tariffs on exports from the European Union because of the illegal aid given to Airbus. Next year thewtowill probably approve European penalties on America because of its aid to Boeing. The decision adds to already heightened trade ten- sions. America said it would start imposing the tariffs on October 18th, of 10% on aircraft and 25% on a range of other goods, including cheese, olives, wine and whiskey.

Earlier, thewtosaid it now expectsglobal trade flowsto increase by just 1% this year, down from the 2% it forecast in April and the slowest pace since the financial crisis. Unresolved trade conflicts have led to greater uncertainty about policy, causing busi- nesses to put off investment. The growth of exports and imports slowed across all regions in the first half of 2019. Meanwhile, an index of Ameri- canmanufacturingfell to its lowest level since June 2009.

Perils of the cocktail party The chairman of Credit Suisse said the bank had been wrong to conduct surveillance on Iqbal Khan, a former executive, over fears he would lure away staff and clients. The bank’s chief operating officer, who admitted to acting alone in ordering the operation, and the head of security, resigned. A review by a law firm called in by Switzerland’s second-big- gest bank cleared Tidjane Thiam, the chief executive, of any involvement. Mr Thiam

had an acrimonious relation- ship with Mr Khan; the pair reportedly had a blazing row at a cocktail party in January.

Wells Fargonamed Charles Scharf as its new chief executive, six months after Tim Sloan resigned in the aftermath of a mis-selling scandal. Mr Scharf has led Bank of New York Mellon and Visa and was a senior executive at JPMorgan Chase during the financial crisis.

India’scentral bank reassured the public that the banking system is “safe and stable and there is no need to panic” as another scandal emerged. Curbs had to be imposed on withdrawals by nervous savers from Punjab and Maharashtra Co-operative Bank as it came under scrutiny for financial irregularities. Another bank faced restrictions on its ability to make new loans.

Faced with a sharp downturn in the country’s housing mar- ket, Australia’scentral bank cut its main interest rate by a quarter of a percentage point, to 0%, the lowest ever.

A drop in Turkey’sannual inflation rate to 9%, the lowest in almost three years, increased the betting that the

central bank would cut interest rates again, despite recent remarks by its new governor that there was limited room for manoeuvre.

PayPal became the first foreign company to enter China’s payments industrywhen it took a 70% stake in a domestic digital-payments firm. Ameri- can companies have been trying for years to break into a market that is dominated by Alibaba and Tencent.

Japan’s sales taxrose from 8% to 10%. The increase had been postponed in 2015 and again in 2017 amid worries of a slump in consumer spending, which happened after a previous raise to the tax in 2014. Food and non-alcoholic drinks continue to be taxed at 8%.

Novartisannounced a partnership with Microsoftto apply artificial-intelligence technology to medicine. In one of the biggest collaborations in the field, the Swiss drugmaker said the research would start with tackling personalised remedies for eye degeneration, cell and gene therapy and drug design.

Founded in 1969 by two men making surfboards in a garage, Rip Curl, an Australian surfing

gear and clothing company, was sold to Kathmandu, a New Zealand outdoor specialist. The men, now in their 70s, sold their firm for A$350m ($235m).

A report from Kroll, a corporate investigations and consultan- cy firm, highlighted the rep- utational risk to businesses from fake news on social media. Across the company bosses surveyed in 13 coun- tries, 84% felt threatened by attempts to manipulate mar- kets with fake stories, either by competitors or short sellers. One American cosmetics company saw sales drop by a fifth after a campaign on Twit- ter falsely claimed it tested its products on animals.

The guru The leaked transcript of Mark Zuckerberg’scomments at a staff meeting provided a glimpse into the inner thoughts of Facebook’s boss. Mr Zuckerberg said that Eliza- beth Warren’s proposal to break up big tech companies would “suck” and “you go to the mat and you fight” over something so “existential”. When asked about brain- computer interfaces, he joked that disapproving headlines would say “Facebook wants to perform brain surgery”.

Economic policy uncertainty

Source: Economic Policy Uncertainty

Global average 1997-2015=

2005 10 15 19

100

200

300

400

12 Leaders The EconomistOctober 5th 2019

T

en yearsago this month George Papandreou, then the newly elected prime minister of Greece, announced to the world that the government’s books had been cooked and that the bud- get deficit in 2009 was in fact double previous estimates. Inves- tors panicked and Greece lost access to capital markets, eventu- ally forcing it to seek help from the European Union and theimf. A severe financial crisis, together with swingeing spending cuts demanded by the creditors, plunged Greece into one of the deep- est downturns experienced by a rich country since the second world war. Now another new prime minister, Kyriakos Mitsotakis, is try- ing to get Greece back on its feet (see Finance section). Though the economy has begun expanding again, growth is lacklustre and output is nearly a quarter below its level in 2007. The country left its third bail-out last year with a public debt of 180% ofgdp. It is now sub- ject to the terms of a debt-relief deal struck with its European creditors. This deal was designed to look tough in order to be palatable to elector- ates in the north of Europe, who hate the idea of bailing out southerners, but experts agree that it is wildly unrealistic. The time has come to stop pretending and settle Greece’s finances once and for all. The agreement of 2018 extends the maturities of some of Greece’s loans andoffers some interest-rate relief. In return, as well as continuing reforms, Greece must hit draconian fiscal tar- gets. It must run a primary surplus (ie, before interest payments) of 3% ofgdpa year until 2022, and of 2%, on average, until 2060. The question of debt relief is not to be revisited until 2032. That these targets are fanciful is an open secret. Only a hand- ful of countries have pulled off such a feat—most were resource- rich and thriving. To expect Greece to commit to such fiscal mas- ochism for four decades is not sensible. As theimfpoints out, it will eventually need real debt relief. And as the economy is still depressed, there is a strong case for some fiscal loosening now.

The penal terms of the deal of 2018 reflect mistrust. Northern politicians could not sell a deal at home that appeared to let Greece off the hook. As recent attacks in Germany on the doveish policies of the European Central Bank illustrate, suspicions in the north that they are underwriting the south are still alive. For its part Greece has shirked the reforms needed if it is to start growing fast enough to catch up with the rest of the euro area. The previous government, led by Syriza, a left-wing party, hit its fiscal targets but slid back on reform. Banks are stuffed with dud loans and the framework for dealing with them is in- complete. Tax revenues rely on too narrow a base, in turn requir- ing high rates that deter hiring. In registering property or resolv- ing business disputes, the World Bank’s “Doing Business” report ranks Greece in the bottom third of countries. There is a way out. When Greeks voted in July for Mr Mitsotakis, who stood on a platform of reform, they turned their back on populism. Creditors should take that as a sign of good faith. They should also set out a new goal—that, in exchange for more reforms, Greece should get a debt write-down that is big enough to allow it to service its debts sustainably without run- ning a primary surplus. During this period, provided Greece passes milestones on reforms, its fiscal-surplus targets should gradually be relaxed. As a goodwill gesture, theeucould mean- while release over €1bn a year of profits from a bond-buying scheme to give Greece extra fiscal space. Yet Mr Mitsotakis has been slow to honour his promise of re- form. He needs to roll up his sleeves. He has won public support and impressed the markets—the premium of Greek ten-year government bond yields over German ones has fallen by half this year. He must persuade northerners that Greece has earned some flexibility. This means facing up to the problems that hold back the economy. For ten years governments and creditors have muddled through. Greeks deserve better. 7

Time to end extend and pretend

Greece General government gross debt, % of GDP

100

150

200

2004 10 15 18

Greece wants freedom. Its creditors don’t want it to have a free lunch. A new grand bargain is required

Greece’s debt odyssey

I

t is two months now since India’s parliament abruptly amended the constitution to downgrade Jammu & Kashmir from a partly autonomous state to a territory administered by the central government. That means it is also two months since the Indian authorities detained some 2,000 prominent Kashmi- ris—politicians, businessmen, activists, journalists—to prevent them from protesting. They continue to be held without charge, many in unknown places. Meanwhile the 7m-odd residents of the Kashmir valley, the state’s main population centre, are under a lockdown of a different sort. Mobile phones and the internet remain cut off; getting around is hard and getting in or out is pos-

sible only on the authorities’ say-so. In theory the ruling Bhara- tiya Janata Party (bjp) is integrating Kashmir into the rest of In- dia. In practice it has turned the valley into a vast open-air detention centre. That the bjphas it in for Kashmiris is hardly news. The mani- festo the party put out before it won its thumping victory in na- tional elections earlier this year called for the scrapping of Jam- mu & Kashmir’s special status. The state is the only one in India with a Muslim majority, and the Hindu-nationalist bjpdislikes anything that smacks of privileges for Muslims. The bjpalso likes to parade its defiance of Pakistan, which controls a slice of

Vale of tears

The courts’ refusal to curb repression in Kashmir should alarm all Indians

Kashmir

The EconomistOctober 5th 2019 Leaders 13

2 Kashmir and claims the rest, and has vehemently denounced the upheaval in the valley. For Narendra Modi, the prime minister and leader of the bjp, picking on Kashmir presents an easy op- portunity to pose as a resolute nationalist who will not hesitate to confront his enemies. But if Mr Modi’s actions are not that surprising, the reaction of the courts has been (see Asia section). India’s judges are noto- riously meddlesome and difficult. No question is beneath their scrutiny: what destinations state-owned airlines should fly to, say, or just how close a liquor store can be to a highway. They have dealt all sorts of embarrassing defeats to the central govern- ment in recent years, inventing a previously unknown right to privacy that almost scuppered a huge biometric identification scheme, and voiding a lucrative auction of mobile-telephone li- cences. Yet on the many glaring abuses occurring in Kashmir they have remained resolutely—and shamefully—silent. Although the courts in Kashmir are in theory functioning, lawyers are striking, making it hard for petitioners to get any- where. The chief justice of the Supreme Court in Delhi has de- clared that he is simply too busy to hear all the cases related to the government’s actions in Kashmir. He passed them to other benches of the Supreme Court, one of which gave the govern- ment a further month to contemplate its response. Conveniently enough, that pushes any ruling about whether or not the govern- ment’s downgrading of Jammu & Kashmir from a state to a terri- tory was constitutional until after the change takes effect, on Oc- tober 31st. It will also mean, in all likelihood, a further month of

detention without trial for the Kashmiris rounded up by the au- thorities and another month during which humbler Kashmiris will be deprived of rights that other Indians take for granted. Few of those other Indians will care very much. The Kashmir valley is hemmed in by the Himalayas at the northern extreme of the country, far from most Indians’ thoughts and experience. It has been in some degree of turmoil since partition and indepen- dence 71 years ago. It suffers separatist violence, now mostly home-grown rather than instigated by Pakistan, which demands a response from India’s security services—though that does not justify today’s wholesale lockdown. To the extent that the rest of the country gives Kashmiris any thought, it tends to see them as troublemakers, if not traitors. Many Indians are toasting Mr Modi for at last giving them their comeuppance. Both gleeful and indifferent observers ought to be more wor- ried. Mr Modi’s authoritarian instincts are not confined to Kash- mir. If the courts continue to let him, he will doubtless continue to reshape India in keeping with the bjp’s plainly stated goals. That includes stripping 1 poor and illiterate residents of the state of Assam of their citizenship, for example, if they do not have the correct paperwork to prove that they are Indian citizens. Then there is the bjp’s plan to finish the job begun by Hindu zeal- ots in 1992 by building a temple on the site of the mosque they de- molished. Events in Kashmir show that the government is ready to trample Indians’ civil rights in order to squelch resistance to its actions. If the Supreme Court is willing to look away today, who is to say that the government will not feel free to carry on? 7

T

o the average capitalist “open source” software may seem like a pretty odd idea. Like most products, conventional com- puter software—from video games to operating systems—is de- veloped in secret, away from the prying eyes of competitors, and then sold to customers as a finished product. Open-source soft- ware, which has roots in the collaborative atmosphere of com- puting’s earliest days, takes the opposite approach. Code is pub- lic, and anyone is free to take it, modify it, share it, suggest improvements or add new features. It has been a striking success. Open-source software runs more than half the world’s web- sites and, in the form of Android, more than 80% of its smartphones. Some governments, in- cluding Germany’s and Brazil’s, prefer their offi- cials to use open-source software, in part be- cause it reduces their dependence on foreign companies. The security-conscious appreciate the ability to inspect, in detail, the goods they are using. It is per- fectly compatible with making money. In July ibmspent $34bn to buy Red Hat, an American maker of a free open-source operat- ing system, which earns its crust by charging for ancillary ser- vices like customer support and training. Now the model is spreading to chips. risc-vis a set of open- source designs for microchips that was initially developed a de- cade ago at the University of California, Berkeley. These days it is attracting attention from many big technology firms, including

Google, Nvidia and Qualcomm (see Science section). In August ibmmade its Power chip designs open-source. These moves are welcome, for two reasons. The first is economic. The chip business is highly concentrat- ed. risc-vcompetes with closed-source designs from Arm, a Jap- anese-owned firm which monopolises the market for tablet and smartphone chips, and is a dominant presence in the fast-grow- ing “internet of things”. ibm’s Power will challenge Intel’s grip on desktops and data-centres. A dose of competi- tion could lower prices and quicken innovation. The second reason is geopolitical. America and China are waging a technological cold war; it threatens to damage a computer industry that has become thoroughly globalised. The open- source model, were it to be widely adopted, might help defuse these tensions, by giving both sides at least some of what they want. Start with China. In May America blacklisted Huawei, a Chi- nese tech giant which makes both smartphones and mobile-net- work equipment. That underlined, to other Chinese firms and to the country’s leadership, the risks of a model in which Chinese tech firms build their products on American software and hard- ware designs. Under the label “Made in China 2025”, the country is investing billions to try to boost its domestic capacity. Open-source components offer an alternative supply chain, less subject to any individual country’s control. Alibaba, a Chi-

Open season

The rise of open-source computing is good for competition—and may offer a way to ease the tech war

Technology and politics

16 The EconomistOctober 5th 2019

Letters are welcome and should be addressed to the Editor at The Economist, The Adelphi Building, 1-11 John Adam Street, LondonWC 2 N 6 HT Email: letters@economist More letters are available at: Economist/letters

####### Letters

It’s time to leave Clearly you have thrown cau- tion to the wind regarding any reluctance to hold back on your ill-concealed bile regarding Boris Johnson (“The reck- oning”, September 28th). You say he is the worst prime min- ister in living memory, an opinion so grossly uncharita- ble that it could only emanate from rabid, Brussels-infatuat- ed journalists, wholly given over to Remain propaganda. A few lines later, you say he is “inadequate” to the task and only in office because of Brexit. Is this surprising when one considers how deliberately the deep-state establishment has done its best to scupper Brexit altogether? It would dishonour the wishes of 17 of us stupid, brainless, moronic, uneducated, gormless half- wits, who want our govern- ment back, who want to con- trol our own borders, make our own laws, spend our own money, and who do not wish to be ruled by France and Ger- many and their back-scratch- ing bureaucrats, manipulating a hopeless crony capitalism. You know very well that the euro is on life support and can only prosper if fiscal union is achieved, which implies the end of the nation state. The Lisbon treaty demands full compliance in fiscal and mon- etary policy, in defence and social interaction, of which the most economically damaging and socially divisive is uncontrolled immigration. Is it right-wing to resist these negative developments? Is it wrong to want sovereignty returned? Is it unacceptable to wish not to be a continental European? You leave me al- most speechless at your lack of patriotism (let me guess, you have a house in France and friends in Tuscany). For you democracy is dead, replaced by technocracy, the rule of Plato’s golden souls who know (how do they?) all the outcomes, the ideal way forward, the pre- scriptions for universal happi- ness, unlike us benighted, dead-wood, has-beens. david maples Petersfield, Hampshire

Asking people to vote in a second referendum would be an incredible mark of disre- spect. It would mean that democracy has been replaced with a pernicious kind of dictatorship where people are still allowed to speak up, but their voices are never heard. kenji oshiguru Yokohama, Japan

Charlemagne has the cheek to mention “theeu’s commit- ment to free trade” and the Doha round of multilateral trade negotiations (September 14th). In fact, theeuwas the principal culprit in wrecking this round to defend the eco- nomic obscenity of the com- mon agricultural policy, which you described as “disgraceful” at the time (“Deadlocked in Doha”, March 29th 2003). That article foretold that the failure of Doha would result in “trade- diverting bilateral or regional trade deals”. Theeuis not committed to free trade. It is committed to managed trade to protect thecap. charles efford London

NATO in Afghanistan Regarding the stalled peace deal with the Taliban in Afghanistan (“Talking chop”, September 14th), the over- whelming brunt of the fighting is conducted by the Afghan National Security Forces who, because of their limited train- ing and capability, are taking huge casualties. The Afghan government stopped pub- lishing the data in 2017 but one reliable estimate suggests some 20 are killed each day. This affects morale and recruit- ment; their natoco-operation troops have to work hard to keep them going. Despite the collective effort, the Afghan government controls just over 50% of the country, at best. This demonstrates that, although a peace settlement is ultimately the only way to settle Afghanistan, this is not the time to tinker with nato force numbers. We should not forget that it was the with- drawal of Russian co-operation troops in 1992, not the Soviets’

cessation of formal combat operations in 1989, that pre- saged the collapse of the Naji- bullah regime and the eventual Taliban takeover in 1996. The parallels are not encouraging. In all this, Britain has re- sponsibilities distinct from our duty as anatoally. These are to support and sustain the legitimate Afghan government and its security forces and to protect our partners in that struggle, especially our former interpreters. Our history and engagement with Afghanistan and the sacrifices of the cam- paign demand nothing less. colonel (ret’d) simon diggins Defence attaché, Kabul 2008- Rickmansworth, Hertfordshire

The popes on capitalism Schumpeter described Catho- lic social teaching as “pro- capitalist” (September 7th). True, the church has long rejected collectivism and championed private enter- prise. But popes have also cautioned against capitalism, not least its neoliberal iter- ation. Pius XII blamed “the exploitation of private capital” (as well as “state absolutism”) for working people’s “servi- tude”. Paul VI criticised the “unbridled liberalism” inher- ent in capitalism. John Paul II condemned the increasingly “intrusive, even invasive, character of the logic of the market”. Benedict XVI called for “a new economic model”. Pope Francis stands squarely in this tradition, which doesn’t fit neatly on the secular left-right ideological spectrum. dan brendel Oceanside, California

Einstein’s politics It is interesting that the Albert Einstein exhibition in Shang- hai ignores the fact that he supported some communist causes in the 1920s and 1930s, though not all (“Relatively revealing”, September 21st). Einstein campaigned, for example, for the freedom of the Noulens couple, who had been arrested in Shanghai in 1931 for being leading members of the

Communist International’s liaison office with East and South-East Asian communist parties, all of them illegal at the time. He also supported, after an about turn, the Moscow show trials. Yet, in 1931 he had written in a private letter: I am not for punishment at all, but only for measures that serve society and its protec- tion. In principle I would not be opposed to killing individ- uals who are worthless or dangerous in that sense. I am against it only because I do not trust people, ie, the courts. Stalin seems to have become trustworthy to Einstein. His politics cannot be reduced to supporting free opinion; he may even sometimes have ignored that principle. freddy litten Munich

Hello, Columbus For those who may not be able to get to Columbus, Indiana, to check out its surprising Mod- ernist buildings, I recommend an offbeat movie called, some- what unsurprisingly, “Colum- bus” (“Modernism in the cornfields”, September 14th). It features most of the architec- tural gems referred to in your article, and it got sparkling reviews. As Rotten Tomatoes says, “‘Columbus’.. the clean lines of architecture against the messiness of love.” nigel brachi Edmonton, Canada

A legendary oil man T. Boone Pickens didn’t just show inefficient firms who was boss (Buttonwood, September 21st). When Drake, a hip-hop star, posted a humble brag on Twitter that making “the first million is the hardest”, Pickens shot back: “the first billion is a helluva lot harder.” yacov arnopolin London

18 The EconomistOctober 5th 2019

F

ifty yearsago investing was a distinct- ly human affair. “People would have to take each other out, and dealers would en- tertain fund managers, and no one would know what the prices were,” says Ray Dalio, who worked on the trading floor of the New York Stock Exchange (nyse) in the early 1970s before founding Bridgewater Asso- ciates, now the world’s largest hedge fund. Technology was basic. Kenneth Jacobs, the boss of Lazard, an investment bank, re- members using a pocket calculator to ana- lyse figures gleaned from company reports. His older colleagues used slide rules. Even by the 1980s “reading the Wall Street Journal on your way into work, a television on the trading floor and a ticker tape” offered a significant information advantage, recalls one investor. Since then the role humans play in trad- ing has diminished rapidly. In their place have come computers, algorithms and pas- sive managers—institutions which offer an index fund that holds a basket of shares to match the return of the stockmarket, or sectors of it, rather than trying to beat it (see chart 1, on the next page). On Septem-

ber 13th a widely watched barometer pub- lished by Morningstar, a research firm, re- ported that last month, for the first time, the pot of passive equity assets it measures, at $4, exceeded that run by humans. The rise of financial robotisation is not only changing the speed and makeup of the stockmarket. It also raises questions about the function of markets, the impact of mar- kets on the wider economy, how compa- nies are governed and financial stability.

America is automating Investors have always used different kinds of technology to glean market-moving in- formation before their competitors. Early investors in the Dutch East India Company sought out newsletters about the fortunes of ships around the Cape of Good Hope be- fore they arrived in the Netherlands. The Rothschilds supposedly owe much of their fortune to a carrier pigeon that brought news of the French defeat at the Battle of Waterloo faster than ships. During the era of red braces and slide rules, today’s technological advances start- ed to creep in. Machines took the easier

(and loudest) jobs first. In the 1970s floor traders bellowing to each other in an ex- change started to be replaced by electronic execution, which made it easier for every- one to gather data on prices and volume. That, in turn, improved execution by creat- ing greater certainty about price. In portfolio management, algorithms have also been around for decades. In 1975 Jack Bogle founded Vanguard, which created the first index fund, thus automat- ing the simplest possible portfolio alloca- tion. In the 1980s and 1990s fancier auto- mated products emerged, such as quantitative hedge funds, known as “quant” funds, and exchange-traded funds (etfs), respectively. Some etfs track indi- ces, but others obey more sophisticated in- vestment rules by automating decisions long championed by humans, such as buy- ing so-called value stocks; which look cheap compared with the company’s as- sets. Since their inception many of the quant funds have designed algorithms that can scour market data, hunting for stocks with other appealing, human-chosen traits, known in the jargon as “factors”. The idea of factors came from two econ- omists, Eugene Fama and Kenneth French, and was put into practice by Cliff Asness, a student of Mr Fama, who in 1998 founded aqrCapital Management, now one of the world’s largest hedge funds. Quant funds like aqr program algorithms to choose stocks based on factors that were arrived at by economic theory and borne out by data analysis, such as momentum (recent price

####### March of the machines

NEW YORK The stockmarket is now run by computers

####### Briefing Automatic investing

20 BriefingAutomatic investing The EconomistOctober 5th 2019

2 machine programmed with human tactics. Intriguingly, AlphaZero made what looked like blunders to human eyes. For example, in the middlegame it sacrificed a bishop for a strategic advantage that became clear only much later. Quant funds can be divided into two groups: those like Stockfish, which use ma- chines to mimic human strategies; and those like AlphaZero, which create strat- egies themselves. For 30 years quantitative investing started with a hypothesis, says a quant investor. Investors would test it against historical data and make a judg- ment as to whether it would continue to be useful. Now the order has been reversed. “We start with the data and look for a hy- pothesis,” he says. Humans are not out of the picture en- tirely. Their role is to pick and choose which data to feed into the machine. “You have to tell the algorithm what data to look at,” says the same investor. “If you apply a machine-learning algorithm to too large a dataset often it tends to revert to a very sim- ple strategy, like momentum.” But just as AlphaZero found strategies that looked distinctly inhuman, Mr Jacobs of Lazard says ai-driven algorithmic in- vesting often identifies factors that hu- mans have not. The human minders may seek to understand what the machine has spotted to find new “explainable” factors. Such new factors will eventually join the current ones. But for a time they will give an advantage to those who hold them. Many are cautious. Bryan Kelly of Yale University, who is aqr’s head of machine learning, says its fund has found purely machine-derived factors that appeared to outperform for a while. “But in the end they turned out to be spurious.” He says com- bining machine learning with economic theory works better. Others are outright sceptics—among them Mr Dalio. In chess, he points out, the

rules stay the same. Markets, by contrast, evolve, not least because people learn, and what they learn becomes incorporated in prices. “If somebody discovers what you’ve discovered, not only is it worthless, but it becomes over-discounted, and it will pro- duce losses. There is no guarantee that strategies that worked before will work again,” he says. A machine-learning strat- egy that does not employ human logic is “bound to blow up eventually if it’s not ac- companied by deep understanding.” Nor are the available data as useful as might initially be thought. Traditional hedge-fund managers now analyse all sorts of data to inform their stockpicking decisions: from credit-card records to sat- ellite images of inventories to flight char- ters for private jets. But this proliferation of data does not necessarily allow machines to take over the central job of discovering new investment factors. The reason is that by the standards of ai applications the relevant datasets are tiny. “What determines the amount of data that you really have to work from is the size of the thing that you’re trying to forecast,” says Mr Kelly. For investors in the stock- market that might be monthly returns, for which there are several decades’ worth of data—just a few hundred data-points. That is nothing compared with the gigabytes of data used to train algorithms to recognise faces or drive cars. An oft-heard complaint about mach- ine-driven investing takes quite the oppo- site tack. It is not a swizz, say these critics— far from it. It is terrifying. One fear is that these algorithms might prompt more fre- quent and sudden shocks to share prices. Of particular concern are “flash crashes”. In 2010 more than 5% was wiped off the value

of the s&p500 in a matter of minutes. In 2014 bond prices rallied sharply by more than 5%, again in a matter of minutes. In both cases markets had mostly normalised by the end of the day, but the shallowness of liquidity provided by high-frequency traders was blamed by the regulators as possibly exacerbating the moves. Anxieties that the machine takeover has made mar- kets unmanageably volatile reached a fren- zy last December, as prices plummeted on little news, and during the summer as they gyrated wildly. In 1987 so-called program trading, which sold stocks during a market dip, contributed to the Black Monday rout, when the Dow Jones index fell by 22% in a single day. But the problem then was “herd- ing”—money managers clustering around a single strategy. Today greater variety ex- ists, with different investment funds using varying data sources, time horizons and strategies. Algorithmic trading has been made a scapegoat, argues Michael Mendel- son of aqr. “When markets fall, investors have to explain that loss. And when they don’t understand, they blame a computer.” Machines might even calm markets, he thinks. “Computers do not panic.”

Money never sleeps Another gripe is that traditional asset man- agers can no longer compete. “Public mar- kets are becoming winner-takes-all,” com- plains one of the world’s largest asset managers. “I don’t think we can even come close to competing in this game,” he says. Philippe Jabre, who launched his hotly an- ticipated eponymous fund, Jabre Capital, in 2007, said that computerised models had “imperceptibly replaced” traditional actors in his final letter to clients as he closed some funds last December. And there remains a genuine fear: what happens if quant funds fulfil the promises of their wildest boosters? Stockmarkets are central to modern economies. They match companies in need of cash with investors, and signal how well companies are doing. How they operate has big implications for financial stability and corporate gover- nance. It is therefore significant that algo- rithms untethered from human decision- making are starting to call the shots. The prospect of gaining an edge from machine-derived factors will entice other money managers to pile in. It is natural to be fearful of the consequences, for it is a leap into the unknown. But the more accu- rate and efficient markets are, the better both investors and companies are served. If history is a guide, any new trading advan- tage will first benefit just a few. But the market is relentless. The source of that ad- vantage will become public, and copied. And something new will be understood, not just about the stockmarket, but about the world that it reflects. 7

Vision of the future 3

Sources: Russell3000; Federal Reserve; Bloomberg; Morningstar; ETF; HFR; Preqin; JPMorgan Chase

*Estimate †Government, insurance, foreigners

United States, public equity assets Latest available, % of total public equities(worth$31trn)

Mutual fund Index7.

ETF Index7.

Institutional Index* 1 4.

Smart ETFs2. Quant funds2.

Mutual funds13.

Other hedge funds2.

Other institutions* 8.

Held by companies1 . Others† 2 .

Other owners 40%

Managed funds Human 24%

Managed funds Automated 35%

The EconomistOctober 5th 2019 21

I

t is asweltering day in Austin, but that has not deterred Emily Clark from spend- ing hours registering students at the Uni- versity of Texas to vote, dressed in a banana costume. Ms Clark is a volunteer for move Texas, a group that registers and cam- paigns for young people and minorities in state politics. Democrats have high hopes that groups such as movecan help them win statewide elections in what they see as a battleground state. The Economist’s num- ber-crunching suggests such thoughts are, as Texans say, too big for their britches. For years Democrats have predicted that Texas was just a few election cycles away from becoming a toss-up state. At an event in Austin on September 28th Nancy Pelosi, the Speaker of the House, said that Texas is Democrats’ “hope for the future” of the party. Texas is more racially diverse and younger than the country at large. Non- whites lean heavily Democratic and young Americans are the most Democratic gener- ation of all.

Both groups are less likely to find their way to the polls, though, which is why Tex- as has so far been a lesson in why demogra- phy is not necessarily destiny. Still, the trend is promising for Democrats. In 2016 Hillary Clinton won nearly 600,000 more votes than Barack Obama did in 2012. In 2018 Democratic congressional candidates picked up two House seats, and Beto O’Rourke lost in a closer-than-expected Senate race to Ted Cruz. Since then six of the state’s Republican representatives in

the House have decided to retire before the next congressional elections. Will Demo- crats catch their white whale in 2020? Those who foresee a “blue Texas” point to demography as the primary reason for the state’s supposed competitiveness. While increasing turnout among minority and young voters has helped Democrats rack up big margins in cities, moderates in the suburbs—especially women—have been moving leftwards too. These patterns combined to make the state competitive in last year’s mid-term elections. According to our analysis of precinct-level election results, voters in the state’s four largest metropolitan areas, Houston, Dallas, Aus- tin and San Antonio (also referred to as the “Texas Triangle” because of their position in the state), cast 96% as many votes in 2018 as they did in 2016. That is unusual, be- cause the drop-off from presidential elec- tions to mid-terms is normally much high- er. The Texas Triangle has also become more Democratic; Mr O’Rourke’s share of the vote was six percentage points higher within it than Mrs Clinton’s was in 2016. Republicans draw much of their strength from the state’s vast rural and ex- urban areas, as well as from affluent sub- urbs. Voters living outside the triangle are predominantly loyal to conservative politi- cians; Mr Cruz beat Mr O’Rourke by 24 per- centage points in these areas last year. And although these voters were less likely than

Texas

####### The magenta mammoth

AUSTIN Democrats think they might win Texas in 2020. They are likely to be disappointed

####### United States

22 Republicans and impeachment 23 A union retreat 24 Kennedy 4. 24 University admissions 25 Alligators in the desert 26 Lexington: Doug Jones

Also in this section

The EconomistOctober 5th 2019 United States 23

2 claimed that whistleblower rules changed just before this one acted—drawing a rare rebuke from the intelligence community’s inspector-general. And he accused Mr Schiff, without evidence, of helping to write the whistle-blower’s complaint. The number of officials drawn into the inquiry is growing. On October 2nd Mike Pompeo, the secretary of state, said that he was on the phone call between Messrs Trump and Zelensky; he has also been sub- poenaed. House Democrats are looking into Rick Perry, the energy secretary, who travelled to Ukraine in May. They are also interested in William Barr, the attorney- general, whose Justice Department initial- ly blocked the release of the whistle-blow- er’s complaint, and who Mr Trump impli- cated in his efforts to enlist foreign governments’ help in investigating Mr Bi- den. The House has also subpoenaed Rudy Giuliani, Mr Trump’s personal lawyer, for documents and communications related to Ukraine. So far no House Republicans have backed Ms Pelosi’s inquiry. Two say they support “oversight”, but not impeachment hearings. Most have offered arguments— the whistleblower was not on the call, there was no direct quid pro quo, the call was consistent with American concerns about corruption in Ukraine—that are not quite a full-throated defence of the president. Mr Trump, meanwhile, has used the threat of impeachment to turbocharge fundraising. In the days after Ms Pelosi’s announcement his campaign pulled in $15m and, accord- ing to his campaign manager, at least 50,000 new donors. Conventional wisdom says that Senate Republicans are Mr Trump’s bulwark—that the 20 Republicans required will never vote for removal, even if the Democrat-con- trolled House impeaches. That will proba- bly hold. Although some Republican sena- tors will trash Mr Trump off-the-record, so far only Mitt Romney and Ben Sasse have come near to publicly rebuking the presi- dent; Mr Romney said he was “deeply trou- bled” by Mr Trump’s behaviour. But politicians respond to public opin- ion. The latest YouGov/Economistpoll finds that half of all registered voters, including 11% of Republicans, believe the House should “try to impeach” Mr Trump, and 51% of voters, including 13% of Republicans, think that if the House impeaches Mr Trump, the Senate should vote to remove him from office. Over two-thirds of regis- tered voters believe that abuse of power and obstruction of justice warrant remov- al. This doubtless sets Democratic hearts aflutter. But broad support for the notion that Mr Trump’s conduct was impeachable is not enough to convince a critical mass of Republican senators. Mr Trump often turns politics into a loyalty test. And Re- publicans usually let him have his way. 7

O

n the faceof it, unions are more emboldened today than they have been for years. About 50,000 members of the United Auto Workers (uaw) contin- ued a national shutdown at General Motors this week, amid unusually hard bargaining over pay and conditions. The strike has now become the union’s lon- gest at the car company since the 1970s (see Schumpeter). Sensing how public attitudes to unions are warming, Demo- cratic presidential candidates have been taking turns to pose with the striking workers, notably at car plants in Detroit. Drive four hours from the Motor City, however, to the woodlands of northern Michigan, and an alternative symbol of union fortunes exists. The uaw’s Black Lake resort is in an idyllic, if largely forgotten, spot. On its thousand-acre grounds deer step gingerly between oaks and maples. A few golfers swish along the 18 holes of its tree-lined course. In forest clearings there are sun-dappled log cabins, pine-clad lodges, tennis courts, bars, modernist sculptures and lecture halls. An indoor Olympic-size swimming pool is a few steps from a lakeside slip- way where holidaymakers may launch speedboats. In a small museum visitors can dutifully study the white hard hat and other memorabilia that belonged to Walter Reuther, the revered president of the uaw in its mid-century heyday, when it had three times as many members as it does today. Mr Reuther’s ashes are spread

around the property. Yet the resort, owned by the union since 1967, is in dire straits. A worker recalls how, three decades ago, the place bustled with visitors who dined on Alas- kan king crab on Tuesdays, then rib-eye steaks and shrimp on Thursdays. During a recent visit the fare was more meagre and the place mostly empty. Few union workers take holidays in the woods any more. And though the resort is open to the public—if visitors drive cars built by union labour—it is run at a steep loss. It is said to owe the union over $61m. After the fbi raided the resort in August, union members may conclude its charm has been lost. The feds were investigating a long-running corruption scandal that involves bribery and lavish spending by car companies on the uaw’s recent leaders. One site of interest is a home for a former boss that is still only half-built at Black Lake. Other unions have enjoyed similarly grand retreats. Anyone keen on 18 holes and vintage architecture can still book a spot at the United Steelworkers’ splen- did-looking mansion at Linden Hall in rural Pennsylvania. The Teamsters had their own golf course and holiday camp in Missouri until they sold the place four years ago. Like the uaw, Teamster mem- bership has fallen from its peak. Unions need to modernise themselves to prove more relevant to the members. Getting rid of rustic retreats could be one small way to do that.

In retreat

Organised labour

BLACK LAKE, MICHIGAN A woodland resort symbolises unions’ diminishing fortunes

24 United States The EconomistOctober 5th 2019

S

eeing a manwith plentiful red hair talking in front of a small crowd and several television cameras in Villa Victoria housing development in Boston’s South End, a young man stopped and asked what was going on. Someone told him, “He’s running for election.” “For president?” he inquired. “No, Senate,” he was told. “Is he famous or something?” “He’s a Kennedy.” The young man nodded, turned around and carried on with his day. Joe Kennedy, a congressman who an- nounced last month he was going to run for Senate, has a certain amount of recogni- tion in Massachusetts. His famous sur- name will help fill fundraising tables and may even get the old faithful to knock on doors. But for many young voters the name does not have the same resonance it once did. It may even end up being a drag. Mr Kennedy surprised his fellow- Democrats when he decided to take on Ed Markey, a well-liked Washington veteran. Mr Markey may not be flashy (Thomas Whalen, a political historian at Boston University, says he makes John Kerry, a stiff former senator and secretary of state, look like Mick Jagger), but he is diligent. An en- vironmentalist before it was “cool”, he teamed up with Alexandria Ocasio-Cortez to introduce the Green New Deal in Con- gress. Some wonder why Mr Kennedy, who

is 39, did not wait his turn. After all, Mr Markey is 73. Or why he did not wait to see how Elizabeth Warren, the state’s other senator, does in the Democratic primary. “For him, it’s a smart gamble,” says Scott Ferson, a political consultant and Ted Ken- nedy’s former press secretary. In the past Mr Kennedy would have been a shoo-in for the next available open slot, but the politics and demography of Massachusetts have changed in the decade since Mr Kennedy’s great-uncle Teddy was the Senate’s liberal lion. Mr Kennedy probably thinks Mr Mar- key easier to defeat in a primary than the plethora of talented young politicians in the state, who include Maura Healey, the state attorney-general; Michelle Wu, a Bos- ton city councillor; Ayanna Pressley, a con- gresswoman with a national profile; and Seth Moulton, who recently dropped out of the presidential race. But, says Mr Ferson, it is still questionable whether the gamble will pay off. Mr Kennedy may have hoped the more seasoned Mr Markey would retire rather than take on a richer and younger challeng- er. Instead he is digging in. Although Mr Kennedy is ahead in early polls, Mr Markey has the endorsement of most of the power- ful Democrats in the state and the majority of the state’s congressional delegation, as well as Ms Ocasio-Cortez. He also has the backing of Ms Warren. She knows Mr Ken- nedy well; he met his wife in Ms Warren’s law-school classroom. Some suspect Mr Kennedy feels entitled to the seat because, in a way, he was bred for politics. His great-great-grandfather was a congressman and a Boston mayor. His fa- ther served in Congress for 12 years. His grandfather, Robert, was attorney-general and a senator. He is the great-nephew of a president, and his great-uncle Ted was a Massachusetts senator for 47 years. Mr Kennedy’s reluctance to risk waiting may not sit well with many in the party, but that does not mean he is not well-liked or that he has not been a good worker for his constituents. He is an ardent supporter of gay rights and a campaigner for improved mental-health treatment. He has been an outspoken critic of Donald Trump, which pleases rank-and-file Democrats. He and Mr Markey are both progressive. Indeed, on paper there is very little difference between the two men, apart from age. So far, Mr Kennedy has not articulated a good reason why voters should vote for him over the incumbent. Instead, he most- ly targets Mr Trump in stump speeches. He calls the moment too urgent for “sitting on the sidelines”. For many state Democrats, next year’s presidential election has vital ramifications, so to have an “insider fight among Democrats and a primary seems be- neath the moment,” says Erin O’Brien of University of Massachusetts, Boston. Peo- ple will be more willing to spend time and

resources knocking on doors to beat Mr Trump, she says, than to “defeat someone you like, but you like the other guy more.” Mr Kennedy launched his campaign in the basement of a community centre, in Boston’s East End, very near where his an- cestors disembarked after fleeing the Irish famine in the 1840s. Members of his family lived and worked in the neighbourhood and later represented it in office. The site of the launch was a reminder that his family was not always privileged. The clan has been remarkably resilient—despite scan- dals galore, no Kennedy has lost a race in the state since 1946. That streak may come to an end next year. “If he loses this race,” predicts Mr Whalen, “it’s all over for the Kennedy dynasty.” 7

BOSTON A Kennedy may be a hard sell in Massachusetts, of all places

Dynasties

####### Kennedy 4.

An average Joe

T

he world’smost prestigious universi- ties are primarily in two countries: America and Britain. Strangely, though, the more aristocratic, less meritocratic system of admissions is found not in the country with a House of Lords and a hereditary monarchy, but in the land of rugged indi- vidualism. The American system is under attack, however. In a closely watched case that began in 2014, a group of Asian-Ameri- can students are suing Harvard, claiming discrimination relative to whites. This has shed light on the inner workings of the ad- missions process, which has been tightly guarded by Harvard. Many of the disclosures, such as the preferential treatment given to mostly white and wealthy “legacy students” (those with relatives who attended the universi- ty), look embarrassing. Yet on October 1st a federal judge in Boston ruled in the univer- sity’s favour. This will be merely the pro- logue to a protracted legal battle. Most of the interest in the case stems from the possibility that it could up-end the system of affirmative action for “un- der-represented racial minorities” (chiefly blacks and Hispanics) at elite American universities. This certainly seems to be the goal of Edward Blum, the conservative legal activist funding the case, who has brought other high-profile challenges to the reign- ing system. The Supreme Court has previ- ously held that universities may engage in affirmative action—though it bans quo- tas—in the interests of promoting a racially diverse body of students. Mr Blum’s aim is plainly to appeal the case all the way to the

WASHINGTON, DC Harvard wins, for now

University admissions

####### Making a

####### meritocracy

26 United States The EconomistOctober 5th 2019

N

iki’s west, where Senator Doug Jones and his wife Louise ar- ranged to meet your columnist, is the sort of place a glad- handing southern politician would love to frequent. A canteen- style institution in the middle of Birmingham, it serves catfish, liver and onions and turnip greens to a vast, fast-flowing lunch crowd. Yet Mr Jones, a 63-year-old newcomer to politics when he produced a stunning upset in a special election two years ago, ap- peared oblivious to the occasional glance he drew and only inter- ested in the prospect of lunch. “You’re about to be assaulted by food,” he said with relish, while queuing for a tray. His modesty reflects his unusual profile; but also how unloved elected Democrats are in Alabama. Donald Trump is more popular here than in any other state. Notwithstanding Mr Jones’s strong re- cord as a prosecutor and civil-rights campaigner, he was able to be- come Alabama’s first Democratic senator in a quarter of a century chiefly because his Republican opponent was a scandal-plagued religious crank. And even then Roy Moore won 48% of the vote. This ensured Mr Jones always faced a battle for re-election—and a full six-year term—next year. And that prospect looks even more remote following his party’s move to impeach Mr Trump. “I’m real- ly disappointed in the Democratic Party and I’m very much proud of the president,” a woman interrupted Mr Jones’s lunch to tell him. He nodded glumly, as though he had been expecting worse. To try to placate his moderate Republican supporters, whose votes he will again need next year, the senator is trying, as he al- ways does, to find common ground. He says he supports investi- gating Mr Trump’s alleged abuses. But he also chides his fellow Democrats for rushing to judgment. “I have seen too many cases where what appears to be an incredibly damning piece of evidence turns out to be not so damning when you look at the bigger pic- ture.” At the same time he frets that impeachment proceedings could crowd out the Senate’s legislative work—including the pas- sage of Mr Trump’s redo ofnafta, which he supports. This is classic Jones. In his maiden Senate speech, shortly after a gunman massacred 17 people in a school in Florida, the senator defended the South’s gun culture (“I’m a gun guy,” he says) even as he called for background checks and other sensible restrictions. And he has since thrown himself into lawmaking with gusto, put-

ting his name to over 200, mostly bipartisan, bills, on issues as di- verse as road-building and money-laundering. That bespeaks more than a freshman’s naive enthusiasm. Though Democrats are mostly uncompetitive in congressional elections in the South, a few have clung on to state-level office there on the strength of their reputations for getting stuff done and voters’ greater pragmatism as politics moves closer to home. Mr Jones, who had chaired a pre- lunch panel on human trafficking in Birmingham with knowledge and enthusiasm, is trying to persuade Alabamans to extend that pragmatic view to the federal government. “Farmers in Alabama are more dependent on federal than state government,” he says. How much better, then, to have a diligent pragmatist representing them in Washington, dc, than a conservative firebrand. The potential flaws in this effort at supra-partisanship were ob- vious even before Mr Trump’s impeachment loomed into view. On the most divisive issues, including the president, America’s politi- cal tribes seem beyond accommodation. And it is hard to improve Alabamans’ view of Washington when most of their representa- tives and media outlets are bent on rubbishing it. Especially when the Senate’s Republican leadership is so happy to corroborate them. Mitch McConnell has brought hardly any of Mr Jones’s so- ber, life-enhancing bills to the floor. In such a dispiriting environ- ment, it is no wonder many Democrats, following a path most con- servatives have already taken, are now giving up on a moderation altogether. But that conclusion is also politically flawed. A leftward turn might not stop the Democrats winning the White House. But it might make it impossib

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